On April 22, 2011, the NLRB announced that it would bring suit against Arizona and South Dakota to overturn state constitutional amendments banning the use of the card-check process in union elections. In November 2010, voters in Arizona, South Dakota, South Carolina, and Utah passed constitutional amendments requiring secret ballot elections in all union elections. Stating that the amendments are preempted by federal labor law, Acting General Counsel Lafe Solomon announced the upcoming lawsuits against Arizona and South Dakota, declining to bring suit against the latter two states at this time to conserve taxpayer dollars. Currently, federal labor law permits voluntary card check or majority sign-up arrangements as an alternative method to select a union where the union and the employer reach an agreement. Section 7 of the NLRA permits workers to choose a union through two pathways: NLRB-conducted secret-ballot elections and voluntary recognition after a showing of majority support through the use of the card-check or majority sign-up processes. The state constitutional amendments would eliminate the latter pathway to union certification, preventing employers from entering into neutrality agreements with unions utilizing the card-check or majority sign-up processes.  

The NLRB initially threatened legal action against Arizona, South Carolina, South Dakota, and Utah in January 2011. In January 2011 letters to the attorneys general of those four states, Solomon warned that the state amendments would pressure employers who previously agreed to voluntary recognition agreements to withdraw recognition from labor organizations representing their work forces and could lead to unnecessary litigation by workers challenging unions with majority support. In response, the state attorneys general asserted the legality of those amendments and pledged to defend them.  

The state amendments are an outgrowth of the defeat of the Democratic-sponsored Employee Free Choice Act in the 111th Congress, which would have permitted the use of the card-check or majority sign-up processes outside the voluntary recognition context.  This year, Senate Republicans have introduced the Secret Ballot Protection Act, a federal bill mirroring the state constitutional amendments that would ban the card-check/voluntary recognition pathway and require secret ballot elections in all circumstances. With Democrats controlling the Senate, the legislation is unlikely to have majority support in that body, let alone the 60 votes needed for cloture.

NLRB Acting General Counsel Solomon was nominated by President Obama earlier this year to a four-year term as General Counsel on a permanent basis. His nomination is currently pending in the Senate.

On April 22, the Eighth Circuit upheld the decision of a three-member NLRB panel in NLRB v. Whitesell Corp., No. 10-2934 (8th Cir.). Following the Supreme Court’s June 2010 decision in New Process Steel, L.P. v. NLRB, __U.S. __, 130 S.Ct. 2635 (2010), which invalidated hundreds of NLRB decisions presided over by a panel of the two then-remaining members of the NLRB, this Eighth Circuit decision paves the way for the NLRB to seek enforcement of hundreds of invalidated decisions after reconsideration by three-member panels.

Following impasses between the executive branch and the Senate in the final year of the Bush administration and the first year of the Obama administration concerning Board appointments, three NLRB vacancies went unfilled between December 2007 and March 2010, leaving only two Board members, Democrat Wilma Liebman and Republican Peter Schaumber. In December 2007, the existing four-member NLRB had delegated its powers to a three-member panel.  That three-member panel was eventually reduced to Liebman and Schaumber upon the expiration of the third member’s term. These remaining two NLRB members continued to issue decisions. In New Process Steel, the Supreme Court invalidated those decisions as violating the NLRB’s three-member statutory quorum requirement.

In Whitesell Corp., the Eighth Circuit upheld a three-member panel’s post-New Process Steel reconsideration of a 2008 decision by the two-member panel. In light of New Process Steel, the court had previously declined to enforce that two-member panel decision. The court ruled that the previous denial of enforcement would not affect its decision to enforce a proper decision taken by a three-member NLRB panel reconsidering the initial decision. The Eighth Circuit opinion in Whitesell Corp. signals that federal appellate courts will enforce decisions of three-member panels rehearing the invalidated two-member decisions, making it likely that the NLRB will address the invalidated two-member panel cases in this manner.

On April 14, 2011, in an effort to improve the integrity of the verification process, the United States Citizenship and Immigration Services (”USCIS”) announced a final rule that changes the types of documents an employer can accept as proof of identity and employment authorization during the Employment Eligibility Verification process. The rule takes effect May 16, 2011.

Employers are required to verify the identity and employment authorization of their employees by completing a Form I-9, or an Employment Eligibility Verification form. The government provides lists of approved documents that an employer can accept from the employee to prove their identity and eligibility to work. 

By this final rule, USCIS added some documents and removed others.  For example, the new rule now prohibits employers from accepting “Temporary Resident Cards” or “Employment Authorization Cards” because USCIS no longer issues them.  It also adds the new U.S. passport card to the list of documents acceptable to prove both identity and employment authorization.  The rule also prohibits employers from accepting expired documents even if they are on the approved documents lists.

The Social Security Administration (”SSA”) has announced that it will resume sending “no-match letters” to employers this month.  The SSA issues no-match letters when certain information on wage statements provided by the employer does not match the information maintained by the SSA.  The new no-match letters, officially referred to as decentralized correspondence (DECOR) notices, will be sent to employers for the 2010 tax year.

An employer is required to provide the SSA with a W-2 for each of its employees annually.  The SSA uses the earnings information on the W-2 to determine the employee’s Social Security benefit amount.  The SSA compares each employee’s name and social security number on the W-2 with the same information in its records.  If the information does not match, the SSA will not post the employee’s earnings and will issue a no-match letter. 

Since no-match letters may be used as evidence of an employer’s constructive knowledge that specific employees may be unauthorized workers, employers should not simply ignore the letters.   The Department of Justice (”DOJ”) has issued general guidance for employer’s who receive a no-match letter.  For example, the DOJ warns against assuming that a no-match letter conveys information regarding the employee’s immigration status or authority to work, since no-matches can result from simple administrative errors, such as input errors by SSA staff or a reporting error by the employee or employer. 

The SSA started sending no-match letters in 1979 but stopped in 2008 when a federal court enjoined the Department of Homeland Security (”DHS”) and the SSA from implementing a proposed DHS regulation called “Safe Harbor Procedures for Employers Who Receive a No-Match Letter.”  The DHS has since rescinded the proposed regulation.  The SSA will not send no-match letters to employers for the 2007 through 2009 tax years.

Core Provisions:  On April 6, 2011, Rep. Barney Frank (D-MA) reintroduced the Employment Non-Discrimination Act (ENDA), which would prohibit discrimination on the basis of an individual’s actual or perceived sexual orientation or gender identity in decisions regarding hiring, firing, compensation, and other terms, conditions, or privileges of employment.  Employers also could not adversely limit, segregate, or classify employees or applicants because of actual or perceived sexual orientation or gender identity.  In addition, the Act would make it an unlawful employment practice for an employer to discriminate based on actual or perceived sexual orientation or gender identity of a person with whom the employee associates, and prohibits retaliation against employees for exercising their rights under the Act.  The Act would apply to employers with 15 or more employees, but there is an exemption for religious employers and armed forces.

Rep. Frank introduced similar legislation in the 110th Congress, which failed to pass in the Senate, and in the 111th Congress, which failed to make it out of committee. 

Status: Rep. Frank reintroduced the bill with 117 co-sponsors on April 6, 2011.  It was referred to the House committees on Education and Workforce, Administration, Oversight and Government Reform, and the Judiciary on the same day. 

            On Tuesday, April 5, 2011, the Department of Labor (DOL) published updated regulations to the FLSA that were intended to conform the Act to subsequent legislation. The regulations were initially proposed in 2008 under the Bush administration. While the final rule updates regulations regarding the tip credit to reflect an increase in the minimum wage and clarifies existing overtime exemptions for employees engaged in fire protection activities, the rule is more interesting for what it does not do. In response to negative comments from employee groups, DOL opted not to adopt changes that would have clarified that salaried, non-exempt employees could receive bonuses under the fluctuating work week method of compensating overtime. 

            In addition to raising the maximum federal tip credit to $5.12 per hour, the final rule eliminated the maximum contribution percentage on valid mandatory tip pools. Notably, however, the DOL did not adopt a proposed regulation clarifying that bona fide bonus or premium payments do not invalidate the fluctuating workweek method of compensation. This proposal had been supported by the Chamber of Commerce, among other pro-employer entities. Commenters opposed to the proposed rule argued that it would allow employers to reduce employees’ fixed weekly salaries and instead provide compensation primarily through bonus and premium pay. The DOL noted that “in general, commenters representing employers favored the revisions while commenters representing employees strongly opposed the revisions.”

            DOL had also proposed a change to clarify that under section 7(o) of the FLSA, states and local governments that grant employees compensatory time off instead of cash overtime compensation must allow employees to use the compensatory time off on the date requested absent undue disruption to the agency. This clarification was not adopted in the final rule, but DOL reiterated that it maintains its longstanding position that employees are entitled to use compensatory time on the date requested. The final rule also does not include several other provisions originally proposed including providing an overtime exemption for service managers, service writers, service advisers, and service salesman; a regulation that allows an employer to take a meal credit even where the employee does not accept the meal voluntarily; and, examples of when pay is not required for employees who use their employer’s vehicle in home-to-work commuting.